In my previous post “Mobile Marketing and Advertising: Opportunities for SMBs” we talked about overall marketing spend by small business owners. One of the more interesting numbers that we examined was that the average amount spent on Internet or mobile marketing for small businesses is 46 percent of their total budget, and for 20 percent of businesses 81 percent to 100 percent of their budgets are allocated to Internet and mobile marketing. As consumers reliance on mobile technology grows, expectations are for these percentages to continue to grow. Additionally, new technology is broadening opportunities in other traditional retail marketing activities, like couponing and loyalty, blurring the lines between marketing and advertising even a little more.
Some of the earliest loyalty programs were the frequent-flyer miles offered by airlines. The goal of these programs were to encourage people to fly a particular airline in exchange for points that could be used for future flights on the same airline. For many years, the concept of giving future rewards for current purchases remained the model for loyalty programs, but then many large retailers began offering other incentives, such as discounts based on purchase total or special prices for members only. The proliferation of loyalty programs offered by chain stores and major online retailers have led many small business owners to assume that such programs must be so costly that only companies with impressive budgets can afford to sponsor them. In reality that’s a huge misconception
Merchant Warehouse recently developed an infographic that looks at how small businesses can leverage these programs to build their business.
Some of the more telling statistics from the piece revolve around the success of loyalty programs to build a customer base, and more importantly increase customer retention. According to the infographic, 69 percent of the respondents stated that a customer rewards or loyalty program influences their decision of which retailer to patronize. Approximately the same percentage stated that such programs were an important aspect of their relationship with the retailer.
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Did you know that on average, repeat customers spend 67 percent more than customers buying from a company for the first time. Retaining customers is an important part of business growth; it is up to seven times more costly to gain a new customer than it is to retain one. Customer loyalty programs not only help small businesses retain current customers, they can also increase new-customer acquisition by as much as 10 percent or more, in some cases.
And, small businesses can yield even more benefits from a customer loyalty program. When customers register for the program, they provide a great deal of personal information, such as their e-mail, phone number or address. Businesses can mine this data to identify specific demographics about their best customers, such as the neighborhoods where the biggest spenders reside. Marketing campaigns can be better targeted, typically at a lower cost than a mass campaign. Furthermore, businesses can offer loyalty programs with different tiers, based on purchase history, to drive sales during certain times or on selected products.
When designing a loyalty program, it is important for small businesses to keep in mind what customers want from such programs. They prefer programs that make it easy to earn rewards, and over half of those surveyed prefer programs with a tangible financial reward. Approximately 36 percent prefer programs that offer members exclusive access to deals, sales or coupons.
Loyalty programs aren’t just for ‘big box’ retailers. They present a myriad of new opportunities for small and medium sized businesses as well, and they’re not complicated, so why wait – start building your program today and witness first hand what it can do for your business.